The Chinese are siphoning off our speculator money with their $50 per BTC mining costs:
Anyone know what proportion of BTC is produced in China/held in China/sold out of China ?
Without this info I don't know that I can put too much store in this theory Jorge.
There is practically no reliable info on the bitcoin economy, in particular on the flow and ownership of bitcoin by country. (This is a serious problem for would-be investors.)
We can only note that more than 67% of all new bitcoins are mined by Chinese pools, which probably comprise mostly Chinese miners; and that bitcoin has practically no use inside China, except as an instrument of speculative trading inside the exchanges. Until last October, variations of trading volume at those exchanges did not seem to be reflected in the USD transaction volume, which may mean that there was little deposit and withdrawal at those exchanges.
There is efficient arbitrage between the Chinese and non-Chinese exchanges. If Chinese miners sold their coins only in Chinese exchanges, that would tend to depress the price there. Then the arbitragers would immediately move those excess coins to non-Chinese exchanges, until the prices got equalized.
So, I would guess that it does not matter where the Chinese miners sell: the net effect is that a large fraction (if not most) of the bitcoins mined in China are eventually bought and hoarded by non-Chinese investors.
On the likelihood of fixing Bitcoin:
The problem is that the cost [ of validating a transaction ] grows like N^2 for N inputs.
By the way, there is no excuse for the cost to be quadratic. That is one of the many crocks in the BitcoinCore implementation, that will take more crocks to work around. Like the Segregated Witnesses proposal, malleability and its partial patches, blockchain voting to increase the limit, etc..
There you have another possible failure mode for Bitcoin:
runaway code crockification (RCC). As the code gets more complicated and ugly, fewer competent people will be willing to work on it. Their place will be taken by incompetent pople, who will add even more crocks -- and so on until the code will fail and there will be no one capable of fixing it in time.
Just a possibility; but after seeing the malleability problems, the Fork of July fiasco, the "fee merket" plans and the RBF hack, the Seg Wit proposal -- I fear that the RCC may be already underway...
If we understand the reasoning that led to certain details of the design (like the 1 MB limit and the abrupt halvings of the reward) we have a better chance of predicting what would happen if we changed them.
Those who want to reform bitcoin so that it replaces VISA or ACH should put bitcoin aside and start the design such a system from scratch, choosing at each step the gears and rivets that are better suited to those goals. But, first, they should justify why the world needs a better option for those goals and why they think that they can design one.
(That said: in fact, I believe that, as a software engineer, Satoshi, was much better than Gavin and Mike, who are much better than all the Blockstream developers -- who are totally incompetent and irresponsible in that regard.)